President Donald Trump and other senior White House officials have spent the past several days bracing Americans for a potential economic slowdown that they say will then lead to stronger growth ahead.
With fears brewing over the potential tariff impact, the labor market slowing and indicators pointed toward possible negative growth in the first quarter, the president and his top lieutenants are projecting a mostly optimistic outlook tempered with warnings about near-term churning.
“There is a period of transition, because what we’re doing is very big,” Trump said Sunday on the Fox News show “Sunday Morning Futures.” “We’re bringing wealth back to America. That’s a big thing. … It takes a little time, but I think it should be great for us.”
Asked whether he thinks a recession is imminent, Trump said, “I hate to predict things like that.” He later added, “Look, we’re going to have disruption, but we’re OK with that.”
U.S. President Donald Trump gestures as he walks to board Marine One, while departing the White House en route to Florida, in Washington, D.C., U.S., March 7, 2025.
Evelyn Hockstein | Reuters
The comments come during a tumultuous period for markets, with stocks riding a continuing roller coaster depending on the news of the day. Major averages slid again Monday, with the most recent White House assurances doing little to assuage jangled market nerves.
While Trump used Wall Street as a continuous barometer of his progress during his first term in office, he discouraged making it a yardstick this time around.
“What I have to do is build a strong country,” he said. “You can’t really watch the stock market.”
‘A detox period’ from spending
An emerging theme from the administration is that any slowdown or reversal in growth is a legacy from Trump’s predecessor, Joe Biden, and his debt-and-deficit fueled stimulus. Treasury Secretary Scott Bessent has called for a “rebalancing” of the economy away from fiscal and monetary largesse.
“There’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said Friday on CNBC. “The market and the economy have just become hooked and we’ve become addicted to this government spending, and there’s going to be a detox period.”
That adjustment could come sooner rather than later.
The Atlanta Federal Reserve’s closely followed GDPNow gauge of incoming economic data is tracking a 2.4% decline in the growth rate for the first quarter. If it holds up — the measure can be volatile, particularly early in the quarter — it would be the first quarter to go negative in three years and the biggest retrenchment since the Covid pandemic.
National Economic Council Director Kevin Hassett, in a Monday interview with CNBC, called the GDPNow outlook “a metric of the inheritance of President Biden” and “a very, very temporary phenomenon.”
“There are a lot of reasons to be extremely bullish about the economy going forward,” he said. “But for sure, this quarter, there are some blips in the data, including the negative GDPNow, which are related both to the Biden inheritance and to some timing effects that are happening ahead of tariffs.”
Speaking Sunday to NBC’s “Meet the Press,” Commerce Secretary Howard Lutnick said: “There’s going to be no recession in America. … If Donald Trump is bringing growth to America, I would never bet on recession, no chance.”
Worries about jobs and the consumer
One big mover for the Fed model was a surge in the trade deficit to a record $131.4 billion in January, in part the product of a jump in gold imports as well as companies stockpiling ahead of the tariffs.
However, there also are rising concerns about consumer spending following a pullback in January. Consumer activity accounts for more than two-thirds of GDP, so any further decline would be added cause for concern.
At the same time, a decent headline payrolls gain in February of 151,000 masked some underlying trouble spots for the economy.
While the commonly cited unemployment rate just nudged up to 4.1%, the so-called real rate that measures discouraged workers and those at work part time but would rather have full-time jobs soared to 8%, a half percentage point gain to the highest level since October 2021.
The increase came as rolls of those holding part-time jobs for economic reasons rose by 460,000, a 10% jump to the highest level since May 2021. Most of the move in the category came from those citing slack work or business conditions. Further, the level of those reporting at work full time slumped by 1.2 million while part-timers spiked by 610,000.
Market veteran Jim Paulsen, a former economist and strategist with Wells Fargo and other firms, noted in a Substack post that the labor market is approaching “stall speed” and that the gains in the real unemployment rate are consistent with a recession, though that’s not necessarily his forecast.
The rise, he wrote, “highlights increasing stress in the U.S. jobs market. Moreover, this is yet another indicator which will fan recession fears among investors and boost worries about a potential bear market.”
Few economists on Wall Street are expecting a recession. Goldman Sachs, for instance, cut its GDP outlook for 2025 to 1.7%, down half a percentage point from the previous forecast, while nudging up the 12-month recession probability to just 20%, from 15%.
Trump administration officials insist the current soft patch, including the tariff uncertainty, is part of a broader strategy.
“What we’re doing is we’re building a tremendous foundation,” Trump said on the Fox show.
